Worldwide Income Tax: Do Expats Owe Indonesia for Earnings from Europe?

Living in Indonesia but earning an income from Europe? You may be required to pay taxes on that income to the Indonesian government. Under Indonesian law, if you are recognized as a tax resident, you are obligated to report all income — both domestic and foreign.

This article explains who qualifies as a tax resident in Indonesia, how foreign income — including European earnings — is taxed, and how to avoid double taxation.

Who Qualifies as a Tax Resident in Indonesia?

As of 2025, according to Indonesian regulations, you are considered a tax resident if:

You stay in Indonesia for more than 183 days in any 12-month period.
Or you have a permanent residence (such as with a Stay Permit/KITAS or Permanent Residency/KITAP) and a clear intention to reside in Indonesia long-term.

If either of these conditions is met, you are officially considered a resident taxpayer and must declare all sources of income — both from within Indonesia and abroad.

What Types of Income Are Subject to Tax?

Once you are classified as a tax resident, your annual tax return must include both types of income:

◾ Income from Indonesia

Salaries paid by a local employer
Profits from business operations within Indonesia
Rental income
Investment returns, including from securities

◾ Foreign Income (Worldwide Earnings)

Remote work or freelance income paid by overseas clients or companies
Dividends from European and other foreign corporations
Rental income from properties located outside of Indonesia
Interest from overseas bank deposits

Important: Even if the funds remain abroad and are never transferred to an Indonesian account, they are still taxable if you are a tax resident.

Personal Income Tax Rates in Indonesia (2025)

Indonesia adopts a progressive tax rate system:

Up to IDR 60 million/year (approx. $3,900) — 5%
IDR 60–250 million — 15%
IDR 250–500 million — 25%
IDR 500 million – 5 billion — 30%
Over IDR 5 billion — 35%

Note that these rates are applied progressively; the first IDR 60 million is taxed at the lowest rate — only the portion exceeding each threshold is taxed at the higher rate.

How to Avoid Double Taxation?

As of 2025, Indonesia has active Double Taxation Avoidance Agreements (DTAAs) with over 60 countries, including:

Germany
France
United Kingdom
Netherlands
Switzerland

These agreements allow for:

Tax credits in Indonesia for taxes already paid abroad;
Or partial/full exemption of certain income from Indonesian tax (depending on the specific DTAA).

To benefit from a DTAA, you must submit the following documents:

Tax Residency Certificate from the foreign country
Proof of income origin and disbursement
Proof of tax payments (e.g., bank statements or payslips)

Without appropriate documentation, you may not be eligible for tax relief.

What Should Expats with European Income Do?

📌 Key Steps:

Obtain an NPWP — your Indonesian taxpayer identification number. This is essential for filing returns and paying taxes.
Track your foreign income — organize statements, payment receipts, contracts, and reports.
Prepare documents for overseas tax credits — check with the source country on how to get a Tax Residency Certificate.
File your annual SPT tax return — by March 31 of the following year.
Consult a tax advisor — especially if you hold an investment portfolio, real estate, or passive income abroad.

If You're Not a Tax Resident, Do You Still Pay?

If you spend less than 183 days in Indonesia within a 12-month period and do not have a permanent home in the country, you are regarded as a non-resident.

In this case, you're only taxed on income sourced from within Indonesia — for example, if you own a rental villa in Bali listed on Airbnb.

Important: Even if you are formally in the country on a tourist visa, spending more than 183 days in any 12-month span can lead the tax authorities to classify you as a resident. Indonesian tax authorities use immigration data extensively to determine taxpayer status.

Summary for Expats with European Earnings

If you live in Indonesia but maintain active professional or investment activities in Europe, it's very likely that you're obligated to pay taxes on your foreign income to the Indonesian government.

Key considerations:

Tax resident = must report all worldwide income
It doesn’t matter whether you transfer the funds to Indonesia or keep them abroad
DTAAs with European countries help prevent double taxation — if you comply with the documentation requirements

Financial planning, timely filing, and consulting tax professionals will help you stay compliant and protect your financial wellbeing.

Frequently Asked Questions

Do I owe taxes in Indonesia if I don’t transfer my European income here?

Yes. If you are a tax resident, your obligation begins when the income is received — regardless of where the money is held.

I live in Indonesia for six months a year. What are the tax implications?

If you're in the country for more than 183 days within any rolling 12-month period, you are considered a tax resident and must pay taxes on all income, including from Europe.

I already paid tax on income in Germany. Do I have to pay again in Indonesia?

If Indonesia has a DTAA with that country (and it does with Germany), the tax you paid in Germany may be credited against your Indonesian tax. You'll need to submit the proper validating documents.

Conclusion

Indonesia applies a progressive income tax system to all its residents, regardless of nationality. If you live — or plan to live — in Indonesia while maintaining professional or investment income in Europe, you are taxed on your entire worldwide income, not just local earnings.

To properly manage your obligations:

Determine your tax residency status
Gather necessary documentation from abroad
Seek guidance from qualified tax professionals

Most importantly, do not neglect your reporting duties. Indonesia's tax office is increasingly digital and works in coordination with global fiscal institutions through automatic information exchange.

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